Uruguay has introduced new rules under its 2025-2029 National Budget to broaden dividend withholding tax obligations and expand the taxation of indirect transfers involving Uruguayan assets.
Uruguay has enacted new measures on dividend withholding tax and the taxation of indirect transfers of Uruguayan assets under Law No. 20446 of 16 December 2025, included in the country’s 2025-2029 National Budget.
The changes maintain the existing 7% withholding tax on gross dividends distributed to non-residents from profits subject to corporate tax (IRAE), unless reduced under a tax treaty. However, dividends paid from non-taxable income may now also be subject to withholding tax if the distributing company is ordinarily subject to corporate tax based on its legal form, the shareholder’s jurisdiction taxes the dividends, and that jurisdiction grants a foreign tax credit for the tax paid in Uruguay.
An exemption applies where the shareholder cannot use the foreign tax credit because of negative taxable income in its jurisdiction.
The legislation also broadens the scope of taxable Uruguayan-source income for non-residents disposing of shares or equity interests in non-resident entities. The rules apply if, during the 365 days preceding the transaction, more than 50% of the entity’s total assets consisted directly or indirectly of property or assets located in Uruguay, or if the value of the underlying Uruguayan assets exceeded 31,500,000 UI and the transaction involved the indirect transfer of more than 50% of those assets.
Where transfers are carried out through multiple legally linked or related entities, the percentages transferred must be aggregated to determine whether the 50% threshold is met.
For transactions involving shares in Uruguayan resident entities, the valuation of local shares must reflect only the proportion of underlying assets located in Uruguay. If tax is triggered, the taxable Uruguayan-source income is calculated proportionally based on the ratio between the value of Uruguayan assets and the non-resident entity’s total global assets.
The rules also provide exemptions for internal reorganisations, including share swaps, mergers and spin-offs, provided the ultimate final owners of all participating entities remain the same and at least 95% of their equity interests remain unchanged for at least two years after the transaction. In share swap transactions, acquiring entities must also retain the shares for a minimum of two years.
Earlier, the Uruguayan Senate resumed the detailed consideration of the National Budget 2025–2029 on 26 November 2025.
